Indonesian court declares Batavia Air bankrupt

Indonesia's commercial court has declared budget carrier Batavia Air bankrupt just months after AirAsia, Southeast Asia's top low-cost airline, aborted a deal to invest in it, officials said Thursday.

Agus Iskandar, presiding judge at the Jakarta Commercial Court, said a bankruptcy petition filed by U.S.-based International Lease Finance Corporation was approved on Wednesday after Batavia Air failed to pay a $4.7 million debt that was due Dec. 13. Flights abruptly stopped just after midnight, stranding hundreds of passengers across the country.

He said Batavia's debt was from the purchase of two Airbus A330s financed by ILFC through a leasing scheme.

Batavia spokeswoman Elly Simanjuntak said the airline was planning to use the two planes to fly Indonesian hajj pilgrims to Mecca. The airline, however, failed to meet government requirements for flying pilgrims. Indonesia's religion ministry oversees travel arrangements for the pilgrimage.

Simanjuntak said that Batavia, owned by Jakarta-based P.T. Metro Batavia, has seven days to decide whether to appeal the court decision, and had yet to make a decision on the matter.

"The court verdict and media information have caused us to lose confidence from our agents, customers and business partners," she said while weeping.

She said the court designated four local law firms to handle all matters related to the company, such as ticket refunds, cargo, taxation and employment settlement for about 3,400 employees.

Transport Ministry spokesman Bambang Ervan said his office has called on Batavia to cooperate with other airlines to help transport stranded passengers to their destinations. He did not know the number of people who were stuck with unusable Batavia tickets.

Malaysia-based AirAsia announced its acquisition of a 49 percent stake in Batavia in July to accelerate expansion in Southeast Asia's biggest economy. But it abandoned the $80 million deal to buy Batavia three months later after determining it was too risky and may hurt earnings.

Batavia began operations in 2002 and operated up to 170 flights daily. It had 39 aircraft at its peak in 2010 and serviced 42 Indonesian cities and destinations in five countries, flying both Boeing and Airbus jets.